UBS On-Air: Market Moves

This week features Shane Lieberman, a Senior Governmental Affairs Advisor at UBS, discussing critical developments in global politics. He delves into the newly announced 25% auto tariffs, explaining their impact on consumers and international relations. The aftermath of a significant Signal leak raises alarms about classified communications' security. Shane also covers the fragile ceasefires in the ongoing conflicts between Israel and Hamas, and the Russia-Ukraine war, highlighting the intricate geopolitical dynamics at play.

The podcast delves into the history of price controls in the U.S., tracing back to Nixon's failed policies of 1971. It discusses the impact of trade taxes on inflation and consumer behavior, warning of potential pitfalls. The conversation shifts to the influence of political partisanship on economic metrics, highlighting contrasting views from Republicans and Democrats on inflation. Additionally, recent positive economic indicators from the UK and upcoming data from France and Spain are explored, along with concerns about data quality and EU trade taxes.

In this engaging discussion, Dean Turner, CIO Economist for the Eurozone and UK, shares his expertise on the potential fallout from President Trump’s upcoming tariffs. He highlights the impact on European markets and the strength of Germany's DAX index. Turner delves into the intricate trade dynamics between the US and EU, exploring both trade surpluses and the implications of non-tariff barriers. He also discusses Europe's possible strategic responses and offers valuable investment insights for navigating corporate bonds in these turbulent times.

President Trump's announcement of a 25% tariff on imported cars and parts raises eyebrows. The new tax is set to impact inflation and growth in the US economy. It’s expected to change consumer behavior while potentially squeezing the auto industry. Additionally, the implications for GDP and domestic companies' profit margins are scrutinized, alongside the role of inventory data as a safeguard against economic uncertainties. How will these economic moves shape the future landscape?

Join Joe Davis, Vanguard's Global Chief Economist, and Jason Draho, UBS's Head of Asset Allocation for the Americas, as they dive into the current U.S. economic landscape. They discuss the resilience of the economy amidst changing tariff dynamics and examine the promising role of AI in boosting productivity. The conversation also touches on the complexities of bond markets, the importance of diversification in investment strategies, and the future of monetary policy amid shifting global trends.

UK inflation data for February surprised analysts with lower figures, raising questions about the reliability of economic indicators. The challenges posed by the government's energy pricing caps are also highlighted as they contribute to impending inflation changes. Quality issues plague labor market and producer price data publications, complicating the economic landscape. The discussion expands to the impact of fiscal policies and global supply chain dynamics on inflation expectations.

Brian Levitt, Global Market Strategist at Invesco, shares his insights on the current economic landscape. He discusses the effects of U.S. trade policy uncertainties and their role in market volatility. Levitt highlights the significance of artificial intelligence as a market megatrend and suggests looking beyond major tech firms for investment opportunities. He also emphasizes a defensive investment strategy focusing on quality and lower volatility, and advocates for a diversified approach that includes mid-cap stocks and European equities.

A recent discussion reveals how a casual chat about military plans among U.S. officials could signal broader policy shifts, particularly concerning Europe. The implications of new trade taxes announced by Trump raise questions about investor confidence and economic impacts. Additionally, the podcast probes U.S. trade measures against Venezuelan exports and their effectiveness, while evaluating how such policies might affect American consumers and upcoming business sentiment.

As markets showed signs of stabilizing last week, investors weigh whether the correction is behind us or has temporarily paused. Jason shares his thoughts, along with recaps the FOMC meeting, the latest economic data, along with previews next week’s anticipated tariff news from the White House. Plus, a review of positioning recommendations. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Media reports suggest that the rather haphazard attempts to restructure the US government could cost half a trillion dollars in lost tax revenues this year. Investors have not priced the restructuring as an efficiency improvement (more efficient government would boost both bonds and equities). While record wealth levels in the US suggest that the high fiscal deficit can be funded, losing tax revenue on this scale will raise concerns about sustainability at some point.